Market Value Analysis (MVA): Houston, TX October, 2014

Capital

– Grants, loans and equity investments

Knowledge

– Information and policy analysis; PolicyMap & Policy Solutions

Innovation

– Products, markets and strategic partnerships

The Reinvestment Fund builds wealth and opportunity for low-wealth communities and low and moderate income individuals

through the promotion of socially and environmentally responsible development.

We achieve our mission through:

Profile of TRF

TRF’s MVA

The Market Value Analysis (MVA) is a tool designed to assist the private market and government officials to identify and comprehend the various elements of local real estate markets. It is based fundamentally on local administrative data sources. By using an MVA, public sector officials and private market actors can more precisely craft intervention strategies in weak markets and support sustainable growth in stronger market segments.

Who is using the MVA?

• Philadelphia, PA

• Wilmington, DE

• Washington, DC

• Baltimore, MD

• San Antonio, TX

• Camden, NJ

• Newark, NJ (and 8 additional regions across the state)

• Reading Area, PA

• Detroit, MI

• Houston, TX

• New Orleans, LA

• Milwaukee, WI

• Pittsburgh, PA

• St. Louis, MO

• Atlantic City, NJ (in process)

• Jacksonville, FL (in process)

• Prince George’s County, MD (in process)

TRF has done this work under contract to governments and foundations in locations including:

Recently Completed MVAs Recently Completed MVAs

TRF MVA Process

Our Normative Assumptions when Analyzing Markets:

• Public subsidy is scarce and it alone cannot create a market;

• Public subsidy must be used to leverage, or clear the path, for private investment;

• In distressed markets, invest into strength (e.g., major institution of place, transportation hub, environmental amenities) – “Build from Strength”;

• All parts of a city are customers of the services and resources that it has to offer;

- Government action is tailored to the market conditions;

• Decisions to invest and/or deploy governmental programs must be based on objectively gathered data and sound quantitative and qualitative analysis.

Preparing the MVA

• Acquire local data and geocode to block groups.

• Inspect and validate data layers.

• Conduct a statistical cluster analysis.

• Identify areas that share common characteristics.

• Map the result.

• Inspect areas of the City for conformity with the statistical/spatial representation.

• Re-solve and re-inspect until the MVA accurately represents areas.

Components of the Houston MVA

• Median sales price 2011-2012

• Coefficient of variance for sales price 2011-2012

• Foreclosure filings as a % of residential sales 2011-2012

• Vacant properties as a % of all housing units 2012

• New construction (single and multifamily) permits as a % of residential parcels 2010-2012

• Owner-occupied as a % of all housing units 2010

• Subsidized rental stock as a % of all rental units 2012

• Commercial or Industrial Area as a % of total land area

• Housing violations as a % of all housing units 2010-2012

Houston Region – COH and ETJ

Study Area Boundaries

Block Groups to Estimate (n = 34)

TRF Validation Route

Median Sales Price, 2010-11

Variance of Sales Price, 2010-11

Foreclosures as a Percentage of Sales, 2010-11

Percent Residential Unit Water Shut Offs, 2010-2012

Percent Single and Multi-Family Construction Permits

Percent Owner Occupied, 2010

Percent Public Housing and Vouchers, 2012

Percent Commercial or Industrial, 2012

Percent of Housing Units with Violations, 2012

MVA Characteristics

MVA

Cluster

Number of

Block Groups

Median Sales

Price 2010-11

Variance of

Sales Price

2010-11

Foreclosures

as a Percent

of Sales

2010-11

Percent

Vacant

Housing Units

2010-2012

Permits as a

Percent of

Housing Units

2010-12

Percent

Owner

Occupied

2010

Percent

Publicly

Subsidized

Rental 2012

Percent

Commerical/

Industrial

Area 2012

Percent of

Housing Units

with Violations

2012

A 40 $571,150 0.529 0.57% 1.88% 2.66% 78.53% 0.00% 3.73% 0.78%

B 104 $315,423 0.463 2.19% 1.78% 1.76% 28.98% 1.38% 10.22% 2.06%

C 117 $272,641 0.444 1.02% 2.49% 2.59% 79.65% 0.78% 6.52% 2.52%

D 129 $147,074 0.485 9.00% 1.77% 0.37% 31.50% 1.96% 9.42% 3.52%

E 113 $146,319 0.408 1.59% 1.26% 1.28% 78.98% 3.68% 5.36% 4.43%

F 157 $81,771 0.494 16.97% 2.59% 0.40% 71.34% 5.96% 8.14% 12.47%

G 158 $79,332 0.463 21.83% 2.15% 0.28% 31.41% 4.90% 11.87% 4.45%

H 153 $50,314 0.624 66.07% 6.03% 0.45% 55.10% 6.62% 10.05% 12.21%

I 35 $27,757 0.567 80.14% 4.91% 0.33% 26.56% 7.78% 4.48% 9.14%Not Classified 120 N/A N/A 10.35% 1.43% 0.07% 4.64% 3.01% 17.37% 1.43%

Study Area 1126 $156,161 0.493 19.52% 2.61% 0.87% 48.44% 3.78% 9.53% 5.79%

Houston MVA 2013, Census (2010) Characteristics

MVA Cluster

Number Percent Number Percent Number Percent Number Percent Number Percent

A 23,944 3.7% 17,331 5.9% 6,613 1.83% 26,197 3.49% 55,550 3.19%

B 83,607 12.8% 22,408 7.6% 61,199 16.93% 97,288 12.97% 159,901 9.19%

C 65,282 10.0% 50,147 17.0% 15,135 4.19% 70,911 9.45% 151,731 8.73%

D 87,186 13.3% 26,228 8.9% 60,958 16.87% 103,413 13.79% 220,447 12.68%

E 65,487 10.0% 51,624 17.5% 13,863 3.84% 70,143 9.35% 172,944 9.94%

F 79,418 12.1% 56,348 19.2% 23,070 6.38% 86,600 11.55% 264,787 15.23%

G 96,600 14.7% 29,310 10.0% 67,290 18.62% 112,511 15.00% 273,807 15.74%

H 65,244 10.0% 35,078 11.9% 30,166 8.35% 75,454 10.06% 200,991 11.56%

I 18,563 2.8% 3,874 1.3% 14,689 4.06% 22,435 2.99% 50,514 2.90%

Not classified 70,292 10.7% 1,866 0.6% 68,426 18.93% 85,065 11.34% 188,364 10.83%

Study Area

Total655,623 294,214 361,409 750,017 1,739,036

Households Owner Occupied Renter Occupied Housing Units Population

MVA Clusters

MVA Clusters, Main Zoom

Southwest Zoom

Block Group Example: Southwest

Block Group STFID 482014510013

All Median Sales Price (2010-2011) $79,000

Percent Non-Residential Parcels 1.5%

Percent Owner Occupied Units 16%

Percent Public Rental 0.6%

Percent Vacant 0%

Percent Foreclosure 13%

Percent Violations 0.4%

MVA 2013 G

Northwest Zoom

Northeast Zoom

Block group Example: Northeast

Block Group STFID 482012203003

All Median Sales Price (2010-2011) $82,500

Percent Non-Residential Parcels 26%

Percent Owner Occupied Units 52%

Percent Public Rental 0%

Percent Vacant 3%

Percent Foreclosure 21%

Percent Violations 21%

MVA 2013 F

Southeast Zoom

CRA Areas and CRA Outreach Areas

RFP Sites Scattered with Development Sites

How Other Cities are Using their MVAs

Using the MVA: Set Priorities by Market Cluster

Sample Activities

Encapsulation: Acquisition/Rehab

Large Scale Housing Development

(e.g., LIHTC)

Land Assembly for Redevelopment

Selective Enhancement of Lots

Quality of Life Code Enforcement

(broken window syndrome)

Arts & Culture Programming

Neighborhood Marketing Campaign

Enhanced Public Safety Measures

Support Nutrition Services

Income Maintenance Programs

Nuisance Abatement

F

Demolition of Dangerous Properties

A B C D E

Each activity can be connected to different responsible organizations, including city agencies, commissions, non-profits, etc. Some activities represent annual expenses; others represent investments with an expectation of longer term returns beyond the immediate beneficiaries. Some are “universal” while others are best targeted. The Market Value Analysis allows for a coordination across organizations, agencies and funding sources (CDBG, CSBG, philanthropic, etc.).

MVA Market Types

Develop CDGB comprehensive plan (Detroit, Wilmington, St. Louis)

Assess changes in the market over time (Phila., Baltimore, Pittsburgh)

Guide capital budget (Detroit)

Evaluate development activities (Pittsburgh, Phila., Houston, Detroit, St.

Louis, cities in NJ)

Focus code enforcement (Phila., Baltimore)

Target demolition and acquisition activities (Baltimore, Phila., Detroit)

Select transformative, tipping point projects (Phila., Baltimore, Pittsburgh)

Engage partners – philanthropic, non-profit – in coordinated efforts to

rebuild neighborhoods (Baltimore, Milwaukee)

Guide federal Neighborhood Stabilization Investment (States of PA & NJ,

Detroit)

Uses of the MVA

Ira Goldstein, President, Policy Solutions The Reinvestment Fund

Contact:

ira.goldstein@trfund.com

www.trfund.com

38

Patterns in the Location of Establishments

39 CRA Summary

1 A birth occurs when a business appears in the NETS database in a particular year but did not exist in the prior year (e.g. business A is a birth if it exists in 2008 but not in 2007). TRF calculated births for the years 2008-2011. 2 A death occurs when a business appears in the NETS database in a particular year but did not exist in the subsequent year (e.g. business A is a death if it exists in 2008 but not in 2009). TRF calculated deaths for the years 2007-2010. 3 A move In represents a business that is listed within a particular geography of interest (City, TIRZ, County) in one year but outside of that boundary in the previous year. TRF calculated move-in for the years 2008-2011. 4A move out represents a business that is listed within a particular geography of interest (City, TIRZ, County) in one year but outside of that boundary in the subsequent year. TRF calculates move outs for the years 2007-2010. 5 Because births and deaths are calculated with a time lag, in some cases the difference in the number of establishments between 2007 and 2011 will vary from the sum of births and move ins minus the sum of deaths and move outs.

Area NameFirms

2007

Firms

2011Births¹ Deaths²

Move

In³

Move

Out⁴

Employees

2007

Employees

2011 Sales 2007 Sales 2011

% Change

in Firms

% Change in

Employees

% Change

in Sales

GREATER FIFTH WARD 611 569 315 335 11 35 7,249 4,313 $1,640,464,871 $1,300,134,673 -5% -41% -21%

NORTHSIDE VILLAGE 568 656 356 253 12 35 4,839 4,432 $495,368,810 $491,167,187 16% -8% -1%

OST / SOUTH UNION 682 813 489 360 20 25 3,199 3,227 $322,062,275 $346,151,482 19% 1% 7%

Total 1,861 2,038 1,160 948 43 95 15,287 11,972 $2,457,895,955 $2,137,453,342 10% -22% -13%

ACRES HOME 1,276 1,729 1,006 550 31 53 7,851 7,696 $704,889,626 $634,646,973 35% -2% -10%

GREATER FIFTH WARD 1,126 1,182 638 559 29 57 10,315 6,803 $1,906,329,110 $1,508,426,121 6% -34% -21%

INDEPENDENCE HEIGHTS 1,069 1,180 610 491 52 69 9,686 8,535 $1,312,805,454 $1,042,063,243 11% -12% -21%

NORTHSIDE VILLAGE 1,201 1,529 859 517 30 58 9,248 8,979 $824,985,925 $672,080,923 27% -3% -19%

OST / SOUTH UNION 1,295 1,541 925 680 39 48 6,842 6,982 $716,503,711 $702,092,653 20% 2% -2%

SUNNYSIDE 912 1,185 721 453 29 30 5,223 6,136 $474,025,328 $432,521,678 30% 17% -9%

Total 6,879 8,346 4,759 3,250 210 315 49,163 45,131 $5,939,539,153 $4,991,831,591 21% -8% -16%

CR

A O

utr

eac

h A

reas

CR

A A

reas

40 OST/South Union CRA Outreach Area 2006-2011

41 OST/South Union Outreach: Firm Move Ins/Births, 2007-11

DRAFT FOR DISCUSSION ONLY

42 OST/ South Union Outreach Firms Deaths/Move Out, 2007-11

43

Patterns in the Location of Workers & Jobs

44 Workforce Concentration by Place of Residence

DRAFT FOR DISCUSSION ONLY

Darkest brown areas show the highest concentration of where workers live in the City – regardless of where they work.

45 Median Commute - All Workers by Place of Residence

DRAFT FOR DISCUSSION ONLY

Generally, workers living within the beltway travel, on average, shorter distances to work than workers residing in other parts of Houston.

46 Employment Concentration by Place of Work

DRAFT FOR DISCUSSION ONLY

Darkest brown areas show those places with the greatest number of jobs.

47

DRAFT FOR DISCUSSION ONLY

Darkest areas represent places with high concentrations of resident low wage workers.

Concentrations of Low-Wage Workers by Place of Residence

48 Concentration of Low-Wage Workers by Place of Work

DRAFT FOR DISCUSSION ONLY

Darkest areas represent the places where there are the greatest concentrations of jobs held by low wage workers, based on work location.

49 Block Groups with More than 30% Low Wage Workers

Ira Goldstein, President, Policy Solutions The Reinvestment Fund

Contact:

ira.goldstein@trfund.com

www.trfund.com